IPEM Global 2026 Preview: Private Equity navigates changing terrain

This article summarizes the main private equity trends that have caught the attention of the IPEM Community team these past few months, and will help shape the IPEM Global 2026 event program. 

We've been speaking to allocators, dealmakers, fundraisers and operators all across Europe, US and Asia about the main trends in private equity.

The conclusion is that private equity is changing. The contour lines are shifting and new features of the landscape - AI disruption, global supply chain pressures, a deeper secondaries space - are requiring GPs to map out, and master a new environment. The AI juggernaut shows no sign of slowing, impacting the growth prospects of firms to differing degrees.

The era of financial engineering is over

The most consistent sentiment from LPs and GPs alike is that the traditional value creation playbook needs an update. The tailwinds that carried many funds through the last decade are gone. Multiple expansion, cheap leverage and stable growth are now longer guaranteed.

As one buyout co-head at a major US firm put it to us directly "returns are now won or lost inside the portfolio company, through operational transformation, leadership development and AI proficiency".

Another senior operating partner at a large global platform frames it similarly, arguing that over half of returns on their platform now come from execution rather than financial structuring.

 "Dealmaking has evolved — it is now about making things happen rather than organising wide auctions. Value creation now requires real operational improvement and EBITDA growth, as investors can no longer wait for valuation levels to increase." Founding Partner, European mid-market PE firm 

A mid-market managing partner describes it as an evolution the industry has needed for some time. "Since 2022, we have entered a new phase of longer hold periods, deeper portfolio engagement and a renewed focus on operational value creation. This is not a correction, it is a maturation."

Exit pressure is affecting everything upstream

Many have told us that exit conditions still remain tough, with many disappointed that 2026 has not led to an easing of realisations.

It's now a choke point that everything else depends on. A senior PE consultant notes that exit windows are tightening and discipline on entry multiples is critical again, with due diligence and exit strategy even more critical in this environment.

A European PE CIO describes a bifurcated market where capital concentrates around the highest-quality assets while everything else waits. The knock-on effect runs directly upstream into fundraising; an LP-side fund selector reviewing 150–200 managers annually observes that the gap between top and bottom performing managers is widening, making manager selection more consequential than at any point in recent memory.

"LPs have been wanting the GPs they invested in to send back money with realised exits, which GPs have been reluctant to do due to lower valuations than they expected. This has led to a more selective approach where only the strongest managers continue to attract capital."
Senior Reporter, M&A and private equity

AI is reshaping portfolio companies and the firms that own them

AI is surfacing as both an opportunity and a risk from the PE community. A CIO at a mid-market GP has built a proprietary AI assessment framework that now informs capital allocation decisions. "This is not theoretical AI, but applied frameworks used in live deal environments."

Register for our upcoming webinar "Is AI the Next Great Value Creator - or the biggest risk in your deal?" on 4 Jun at 2pm CET: 

It's evident that the adoption of agentic AI has become much more widespread compared to 12 months ago. A partner leading digital transformation at a European buyout firm describes GenAI transforming value creation from commercial optimisation to operational efficiency and decision-making.

However, several also flag the risks. A PE partner notes that AI is forcing a fundamental re-evaluation of business models in portfolio companies, with some sectors facing disruption risk that wasn't in the original deal thesis.

Whilst many speak to building AI proficiency at the portfolio and GP level, it's a rapidly moving target that is shaping the industry for the future. 

"How GenAI is transforming value creation in private equity — from commercial optimisation to operational efficiency and decision-making — and the importance of integrating scalable digital capabilities across portfolio companies to unlock productivity and growth."
Partner, Head of Digital, European buyout firm

The mid-market is where the opportunity is concentrating

Private equity's fortunes have always been closely linked with those of the mid-market. After all, accessing high-growth companies that fly below the radar is the case for private equity in the first place. 

What's interesting this year is how regularly the pressures in the large buyout space have been mentioned. The performance of older vintage deals are under scrutiny as largecap assets are more difficult to exit and buyout groups are forced to hold onto them for longer than desired.

Yet early data from Q1 2026 is showing a more nuanced picture, with one PE analyst noting that "large-cap funds have had the broadest shoulders to navigate market volatility caused by macro shocks" providing conditions for EMEA buyout volume to grow 35% to $39.3bn.

A majority of LPs and GPs point to the fact that in a market where large-cap exits are constrained, returns in the mid-market will remain resilient.

"We can no longer rely on financial engineering and multiple expansion as reliable drivers of returns. Operational improvement has become the defining differentiator between top-quartile and median managers." Founder & Managing Partner, US mid-market healthcare PE firm

A fund-of-funds investor focused on North American small-cap notes that founder-owned, underfollowed businesses in less efficient markets can offer more attractive entry points and better alignment than larger buyouts.

Meanwhile, a European mid-market founder argues that complexity and fragmentation in the segment create differentiated investment opportunities that generalist large-cap capital cannot access.

An LP fund selector notes growing appetite for the best managers in small and mid-market strategies specifically.

What "Mastering the Course" looks like for private equity?

Consistency of returns will matter as much as absolute performance. The dispersion between top and median managers is likely to widen, reinforcing LP focus on manager selection, alignment and repeatability of process.

In the words of one CEO of a European mid-market PE firm, "The private equity model is evolving, with returns increasingly driven by operational value creation, and the growing importance of sector specialisation and proprietary deal sourcing in an increasingly competitive market."